Post-COVID Supply Chain Disruption

Jun 17, 2022 | Corporate Member News

The impact of the COVID pandemic in the supply chain world has been well documented from lockdowns to urgent PPE shipments resulting in supply chain disruption.

With COVID restrictions rapidly reducing in many parts of the world, is it fair to comment that the general public assumes that supply chains have recovered and goods will be accessible as before?

Amongst supply chain experts, that is highly questionable, since disruption to freight transportation and warehousing is still clearly evident.

The baby formula shortage in the United States has also alerted the majority, who have only recently learned about supply chains that perhaps, the ‘new normal’ will look very different moving forward.

The question remains “Is the right inventory in the right place at the right time for the right cost?”. A simple statement that supply chain textbooks have cited since their creation, which is in fact not too long ago.

Globalization created a full array of new opportunities for sourcing, manufacturing, assembly, and more, with lower variable costs such as cheaper labor as well as operational infrastructure.

However, rising shipping costs and transportation disruption, as we have seen in recent years, jeopardize the foreseen benefits of international production and sourcing.

Now, it becomes a more in-depth discussion than just contingency planning for unforeseen events such as for example, a global pandemic. Decisions at board room level are being made to change direction and indeed locations for their operating infrastructures and are seen as a strategic imperative rather than a ‘nice-to-have’.

In recent weeks, the COVID zero-tolerance policy in China has seen further chaos added to supply chain woes. With reports of over 150,000 TEU waiting to be shipped from China ports, alternative manufacturing locations are becoming an increasing reality for many brands as the world awaits the impact of the congestion in Europe and the United States. 

Europe and the USA are already receiving panic alerts as the threat of further port congestion, as experienced at unprecedented levels during the COVID pandemic, leads up to the shipping peak season as well as turbulent labor issues such as we reported about Hamburg recently

It is clear we are still living in unprecedented times and shippers have experienced the delays, costs, and bottlenecks that congestion creates during the COVID period. Although forecasting and planning have been at the top of the agenda, it is clear there is uncertainty in the future.

Alternative transportation solutions have been provided to accommodate the shipping challenges. Crane Worldwide Logistics, for example, has provided additional aircraft capacity through regular charters from both Asia to the US and US to Europe as well as Europe to the US to supplement our client’s ongoing requirements. 

Alternative gateways have also been used to avoid substantial delays that have occurred at major US gateways and significant investment has been made to supplement warehousing capacity to adhere to the change in direction from just-in-time to just-in-case inventory management.

Rising inflation, low consumer confidence accompanied by full warehouses, labor and equipment shortages as well as impending strike action could be an indigestible cocktail for many manufacturers in the near future.

Global business is now faced with big decisions, to react or to act to the shipping crisis. In some cases, alternative manufacturing locations have been developed outside of China, in South East Asia, India, and Eastern Europe for example. But, just how far nearshoring will develop is a question of time and strategic planning.

Times are changing and supply chains will prove to be the strategic advantage of the successful businesses of the future. Partnerships matter.

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